After banning crypto mining in 2021, China has deployed a nationwide blockchain development programme.
Chinese U-turn incoming?
China has positioned itself as one of the most hostile countries towards cryptocurrencies, at least in terms of public perception. From banning crypto in 2021 over its crypto crackdown to adding mining to a red list, few aspects of crypto are not banned in China.
Thus, it is all the more surprising that China has now deployed a nationwide blockchain development programme that focuses on real-world use cases. Targeted sectors include energy, law enforcement, taxation, criminal trials, inspection, government data sharing and services, and cross-border finance. The programme was announced by the Cyberspace Administration of China (CAC), which positioned it as an effort to expedite blockchain development and innovation across 15 zones and 164 entities.
China plans to implement blockchain technology on a large scale across different businesses and government organisations. The CAC and other government agencies said they are looking to “promote the intensive and balanced layout of blockchain technology infrastructure in the region, form a large-scale production-level cross-chain data exchange support capability, and promote the formation of a multi-party collaborative blockchain industry ecology.”
Different regulatory departments will coordinate the project’s advancement and promotion and “give full play to the role of blockchain in promoting data sharing, optimising business processes, reducing operating costs, improving collaborative efficiency and building a trusted system.”
This marks a surprising turnaround in China’s position on crypto, which has been anything but positive in the recent past. Still, interest in blockchain technology has never fully disappeared in China, despite the government’s public disapproval of it. The Blockchain-based Service Network (BSN), a government-backed blockchain project in China, is said to be working on NFT-focused infrastructure. One of the project’s goals is to advance the launch of platforms that facilitate the trade and exchange of non-crypto NFTs for fiat currency.
What is China’s long-term plan?
If you are left wondering whether this newly-found enthusiasm for blockchain technology in China is real, you are not alone.
Even industry experts are scratching their heads at this back-and-forth by the Chinese government. On the one hand, the reasons for banning cryptocurrencies are pretty obvious and make sense for an authoritarian country like China: a technology rooted in libertarian ideas that facilitates the free flow of capital and financial transparency (yes, records on the blockchain are public) cannot be in the CCP’s best interest.
On the other hand, China may have made a massive geopolitical blunder by banning miners and driving them to the United States. This significantly reduced China’s leverage over Bitcoin and pretty much eliminated further “China banning Bitcoin” FUD for the future. Chinese analysts are already calling for a reversal of that ban, realising that leaving crypto mining in the hands of the Americans gives the US de facto control over the industry’s long-term direction (regulation permitting).
Whether China decides to “unban” crypto is unclear. But ready yourself for more news of blockchain development programmes coming out of China.
